Monday, October 1, 2012

Much of Asia is closed for harvest festivals today; China and Hong Kong are closed all week.  While Quant looks similar to last week, some rearranging in the top ranks suggests Asia is where we should sow some seeds for the fourth quarter.  Two new entrants into the top 10 today are the iShares MSCI Pacific Ex-Japan Index Fund (EPP) moving from 19th place to 7th, and the iShares MSCI South Korea Index Fund (EWY) gaining 5 positions into 9th place.  They join two broad based China funds in the top 3, GXC and FXI at 1st and 3rd respectively, and the iShares MSCI Emerging Index Fund (EEM) with its heavy Asia weighting maintaining 5th place.  Two S&P 500 funds, VOO and SPY, and two energy funds, VDE and IYE, continue their sectors’ representation in Quant’s top 10 as does the Market Vectors Gold Miners Fund (GDX), names we have seen in the elite ranks since the Fed announced QE3.  If you want to stay exposed to the Bernanke dollar, Quant suggests you stick with the large liquid S&P 500 as two big losers after Friday’s trading were the iShares Russell 2000 Value Fund (IWN) losing 192 positions to rank at 266th and the iShares S&P MidCap 400 Index Fund (IJH) dropping 158 positions to rank at 241.  The ETF Global Indices were down across the board on Friday with the ETF Global1000, the world’s only benchmark that crosses geographies and asset classes, down 0.43% on the day and up 16.5% year to date.  Many managers are talking about harvesting those double digit annual gains and getting out before we go over the fiscal cliff.  Quant’s highest ranked decile today has the second lowest average risk score so beware, that big harvest moon rising on the fourth quarter may be a bad one.

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